Google Offers: Will It Win the War Against Groupon?

We’ve had the great pleasure to discuss Google Offers in several instances – including discussion of the Groupon bid, the possibilityof Google building their own competitor (which, of course, would be Offers), and even the rise and fall of Hotpot as a gateway into both local and social elements for the company. But now Offers is actually running in Portland and is set to start in both San Francisco and New York.

Local is a big deal for Google, but one big question remains: Can Google Offers survive in a market where the competitors hold all the local chips?

What Is Offers?

To start, let’s talk about what Offers entails. There are certainly multiple elements, but the brief version is that it’s Google’s “Groupon equivalent.” Google offers daily deals for specific regions by working with local businesses. Consumers pay for the voucher – getting discounts as high as 90% off, but more typically 25% to 75% off. The merchant then provides the product or service and, a bit later, gets reimbursed by Google.

So far that sounds like almost every other daily deal setup out there, but Google does have some additional elements that are worth noting. For one, Google has set up Offer Sites (first spotted earlier this month) which serve as local business directories and an offer-browsing interface. Users can subscribe to content from these pages, and each individual city page is listed in the Google index (although the company is insistent that they’re not favoring these results above any others). Google Offers can also be integrated with AdWords for a more snazzy search page advertisement – and the offers are likely to be visible in Google Places and on numerous other interfaces.

So maybe “Groupon equivalent” isn’t the right word. Rather, Offers is Google’s response to Groupon – and one that offers some “one-ups” that Groupon will either have to match or fall behind to.

The “One-Ups” of Offers

There are several ways in which Google attempts to one-up the current champion, Groupon, who has 80 million subscribers and a solidly established brand loyalty. Google is trying to provide advantages to both consumers and merchants.

Advantages to Consumers

Improved online offer visibility. While subscriptions are already a viable choice, users will also be able to get news on deals when the business they’re searching for is offering a deal. The AdWords Offers option will let users see the specific promotional details when they conduct local searches. Additionally, the presence of any such Offers data in Google Places or Google Maps wouldincrease visibility. Few of these platforms are confirmed for official integration with Google Offers, but users have spotted experimental formats for Offers in each of the web locations listed above.

Improved on-the-go offer visibility. Google Wallet hasn’t exactly seen tons of success, which is okay because it’s brand new, but not so okay when you look at the general consumer reaction of “Why, exactly, should I be interested?” Well, Offers might actually be a good incentive. Analysts point to Google’s ability to automatically communicate with a user when they’re making a transaction, informing them of a deal in their location. Additionally, any Android system, or even Google Maps on other platforms, could display the results that are nearby.

Saved offers. Users will be able to save offers that they find online that don’t have expiration dates, and the “My Offers” interface (discovered in the City Sites we discussed previously) is compatible with mobile use. Google will simply make long-term coupon access easier.

Other differences for Google, including the ability to use Google Checkout and the fact that Google’s indexing itself, can be seen as grey territory when it comes to user benefit, but when it comes to offer visibility, especially in the mobile world, and storing offers, Google has some real advantages.

Advantages to Merchants

Improved offer visibility. Since the offers are designed to be both profitable and brand-building for companies who use them, the increased visibility mentioned in consumer advantages serve to benefit merchants as well.

Faster payments. Groupon distributes its payments to merchants in three payments (each at 33% of the voucher sales) at 5 days, 30 days, and 60 days after the deal was released. Google will be providing 80% of all the money owed in four days or less. This means better cash flow for companies who use Google, when compared to Groupon.

Improved Places, Ads, and Maps visibility. While all the “Offers” tags integrated with Maps, AdWords, and Places are experimental, the usefulness is apparent: It makes your ad and location more appealing than sites not offering a special coupon.

For merchants, getting money more quickly, looking better on other Google services, and having more visible offers overall can be nothing but good – on the one condition that Google actually gets the attention of consumers.

The “SEO Benefits” Controversy

One additional benefit was allegedly offered to one New York businessman by an official Google salesman. The term used by the businessman was “SEO benefits.” What sort? According to this merchant, the Google rep promised that, should he sign up for offers, his site would become “Number one in Google.” He insisted to Business Insider, when approached for comment, that there were “no code words, no maybes,” and that the sales rep repeatedly promised him the number one position.

Anyone who knows Google ranking, of course, is aware of how painfully not okay being offered organic ranking for money is. When approached about the issue, Google spokesperson Nate Tyler gave the expected line of “Google Offers has no influence whatsoever on the ranking of Google search results.” He further clarifies that, while AdWords consultants are available to help anyone with their ad campaigns, no special advantage will be given to those who purchase from Google Offers – in either ad ranking or consulting.

It could be the salesman misunderstood or that he was lying to get the sale, but in either case Tyler made it clear that further training would take place and that it would be ensured that “Offers salespeople know that participating in Offers will not give merchants any influence or advantage in Google’s search rankings, organic OR paid.”

Conditions of Success

Google has crafted Offers well, so there aren’t “cons,” per se. There are just major advantages that the competition already has. The 83 million current subscribers of Groupon is certainly the most noteworthy, but it’s not impossible that Google will overcome this barrier and successfully stand as a successful local offer company – if, perhaps, not the dominant player in the market (at least from the get go).

Here are a few of the conditions Google will have to meet if they want to win this battle:

They’ll have to increase their sales force. While a Google rep told Business Insider that “a fleet” of salespeople had hit the streets of New York, that doesn’t match the approximately 4,000 salespeople that Groupon already has on the streets. Google will absolutely have to hire more heavily to stand toe-to-toe with Groupon early on, even if they want to later transition to a more automated, self-serve option.

They’ll have to make consumers aware. Even as a writer in this industry, I will sometimes hear about Google shutting down a product that I didn’t even know existed. Google doesn’t always promote their services well, and the ones that have gotten time in the limelight – such as Chrome and Gmail – have tended to be the ones that were the most successful. Whether Google should hit all its users with “we want you to check out Offers” messages, and deck site pages with “check out Offers” messages is another question – but Google definitely needs high-profile visibility for this one.

They’ll have to cross-integrate well. About half of the advantages listed above have to do with presence in Google Places, Google Maps, Android, Google Wallet, and other Google products. Smooth, simple visibility is important. It’s not enough to just attach a sub-feature to Google Maps, as the company did with Hotpot; while no one seemed to mind the sub-feature, no one really used either.

They’ll have to jump in with both feet. “Innovative” is one word to describe Google projects. “Half-assed” is another. Google can’t do this one experimentally or half-way. If they want to succeed, they need to stand behind it fully.

Concluding Thoughts

Is Google Offers good? Yes. It offers distinct advantages to both consumers and merchants, and the cross-integration possibilities are really worthwhile. Is Google Offers going to make it? That depends on a lot of factors, and especially on the overall commitment of the company – financially through hiring a sales force, in web properties through promoting the project, and in marketing through how heavily they push the product at conference and in each region they launch.

That said, if someone’s going to stand up to Groupon with how fully and impressively Groupon established themselves, Google is a top candidate. As Offers picks up momentum, it will be interesting to see how Groupon responds – in offering mobile solutions, better payment terms, and increasing their visibility – to level the playing field. There are many battles left to be fought before the daily deal war is over.